NextEnergy Solar Fund Ltd's (LSE:NESF) proposed measures to reduce leverage and validate its portfolio valuations have been praised by broker Stifel, which suggested other funds in the sector may follow suit.
"At this stage there is no indication given on the potential valuation of the five projects which will be sold," the analyst said, noting that NESF is confident that it will be above their latest valuation.
As the trust intends to invest in battery storage projects but cannot issue equity while it trades on a discount, Stifel analyst Iain Scouller said he thinks these sales "should make a significant difference to the funding position".
The last published NAV was 120.9p at the end of December, putting the shares on around a 12% discount.
NESF's discount is similar to others in the solar sub-sector and far from the biggest or the smallest in the wider renewable energy infrastructure sector.
"We think this may be a catalyst for some narrowing of the discount to the mid-single digit level," Scouller said in a note to clients, reiterating a 'positive' recommendation.
He added: "We also think that other funds in the sector may follow-suit, and start reducing leverage through asset sales."